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Lumen Stock Rises on Better-Than-Expected Q4 Earnings
LUMNLumen(LUMN) ZACKS·2025-02-05 21:01

Core Insights - Lumen Technologies, Inc. reported adjusted earnings of 9 cents per share for Q4 2024, exceeding the Zacks Consensus Estimate of a loss of 8 cents and up from 8 cents in the prior-year quarter [1] - Total revenues for Q4 2024 were 3.329billion,adeclineof5.43.329 billion, a decline of 5.4% year over year, primarily due to divestitures and the sale of the CDN business, but still beating the Zacks Consensus Estimate by 3.4% [2] - For the full year 2024, total revenues were 13.1 billion, down 10% from 2023 [3] Revenue and Segment Performance - Business revenues fell 5.1% to 2.659billion,LargeEnterprisesrevenuesdropped5.52.659 billion, Large Enterprises revenues dropped 5.5% to 845 million, and Mid-Market Enterprise revenues declined 9.8% to 452million[7]−PublicSectorrevenuesincreasedby11452 million [7] - Public Sector revenues increased by 11% to 554 million, while North America's Enterprise Channels revenues decreased by 2.2% to 1.851billion[7]−RevenuesfromMassMarketsweredown6.31.851 billion [7] - Revenues from Mass Markets were down 6.3% year over year to 670 million [9] Strategic Developments - Lumen secured 8.5billioninPCFdealsin2024,drivenbyAI−fueledconnectivitydemand,partneringwithmajortechcompanieslikeMicrosoft,Amazon,GoogleCloud,andMetaPlatforms[4]−Thecompanyisfocusedon"cloudifying"telecomandpromotingitsnetwork−as−a−servicesolutions[4]FinancialHealth−Lumenrepaid8.5 billion in PCF deals in 2024, driven by AI-fueled connectivity demand, partnering with major tech companies like Microsoft, Amazon, Google Cloud, and Meta Platforms [4] - The company is focused on "cloudifying" telecom and promoting its network-as-a-service solutions [4] Financial Health - Lumen repaid 1.6 billion of debt in 2024 and plans to eliminate 1billioninoperatingexpensesby2027,expectingarun−ratecostbenefitofover1 billion in operating expenses by 2027, expecting a run-rate cost benefit of over 250 million in the current year [5] - Total operating expenses decreased by 40% year over year to 3,175million,withoperatingincomeat3,175 million, with operating income at 154 million compared to a loss of 1.776billionintheprior−yearquarter[11]CashFlowandLiquidity−InQ4,Lumengenerated1.776 billion in the prior-year quarter [11] Cash Flow and Liquidity - In Q4, Lumen generated 688 million of net cash from operations, down from 784millionintheprior−yearquarter,withfreecashoutflowof784 million in the prior-year quarter, with free cash outflow of 174 million compared to free cash flow of 50millionintheprior−yearquarter[12]−AsofDecember31,2024,thecompanyhad50 million in the prior-year quarter [12] - As of December 31, 2024, the company had 1.889 billion in cash and cash equivalents and 17.494billioninlong−termdebt[13]FutureOutlook−For2025,LumenexpectsadjustedEBITDAbetween17.494 billion in long-term debt [13] Future Outlook - For 2025, Lumen expects adjusted EBITDA between 3.2 billion and 3.4billion,withcapitalexpendituresprojectedbetween3.4 billion, with capital expenditures projected between 4.1 billion and 4.3billion[14]−ThecompanyanticipatesEBITDAtoreboundsignificantlyin2026,exceeding4.3 billion [14] - The company anticipates EBITDA to rebound significantly in 2026, exceeding 3.5 billion, with growth expected thereafter [14] Market Performance - Following better-than-expected results, LUMN stock rose by 10.7% in pre-market trading, with shares gaining 305.2% over the past year compared to the Technology Services industry's growth of 67% [6]